January - Actuarial Society of India

THE ES OF
FROM THE DESK OF CHAIRPERSON -
AVIJIT CHATTERJEE
LIFE INSURANCE ADVISORY GROUP (LIAG)
FRO
S
ince I last shared the view from my
desk, much has changed or is in the
process of changing. In particular, we
are all coming to understand the effects
of the regulatory changes implemented
in September 2010 on policyholders
and on our businesses.
The most important effect appears to
me to have been in the treatment of
expense and persistency risks in unit
linked business. Firstly, the extent of
expense risk was increased as charges
came to be limited, and secondly,
persistency risk was largely allocated to
companies rather than to policyholders.
We are now in a position where the risks
arising from expenses and persistency
are largely allocated to policyholders in
conventional savings business, and to
the company in unit linked business.
In both cases, it is imperative that the
underlying issue of poor persistency be
addressed if the industry is to prosper.
Expenses and persistency are of
course, to a great extent, two sides of
the same coin: a level of expense that
can comfortably be borne in a 10-year
policy can appear egregious if applied
to a 5-year policy. So the solution must
avijit.chatterjeeiciciprulife.com
be twofold: rstly to become more
efcient, in particular in distribution,
and secondly to improve policyholder
persistency. The principal difculty in
reaching such a solution is in improving
the quality of sales, so as to generate
higher policyholder persistency, while
simultaneously reducing their cost.
To help us see a solution through these
difculties, at this year’s GCA, in the
sessions devoted to life insurance, we
have scheduled some time to focus
on the problem of persistency. The
session will be chaired By r Sudhin
Roy Choudhury, ember (Life, IRA,
and will comprise presentations from
a range of domestic and international
experts followed by a panel discussion.
The session will be followed by detailed
consideration of the Indian life
insurance market from an international
perspective and with some prognosis of
its future. To help disperse any lingering
cloud, we shall then turn to the potential
growth area of disability insurance.
Lastly, two eminent anaging irectors
of Indian life insurance companies will
share their ideas on the future for their
companies and for the industry.
Turning from the GCA, the activities of
the LIAG have continued unabated over
the course of the year, principally in
three areas:
1. We have recommended to Council
of the Institute revisions to
existing guidance notes or practice
standards in respect of peer review
and disclosures to be made in an
IPO, as well as recommending two
brand new guidance notes;
2. We have provided feedback on
proposed regulatory changes when
the profession has been consulted
by the Regulator, in particular in
matters of product design; and
3. We staged a successful and
stimulating seminar on Current
Issues in Life Assurance (CILA in
November. Wide-ranging discussions
covered product and reinsurance
regulation, risk-based capital, the
role of the appointed actuary, etc.
If you are interested in participating in
LIAG’s activities, please get in touch, as
there is more than enough work to go
round.
I look forward to hearing from you,
mployee enets onsulting Professional onduct Issues
WHY ATTEND 15 Th GCA? ... TEASERS FROM SOME SPEAKERS...
Concept, Connotations and Current framework
arket Practices and Asymmetries
Global Best Practices
Blueprint for the Future
C2: Concurrent Sessions on Pension, Employee Benets & Social Security
K. Subrahmanyam and K. Sriram, India
General Insurance concurrent session
In the wave of regulatory changes related to insurers’ solvency, insurers worldwide are considering the usage of Economic
Capital (EC models to calculate the amount of capital they need to set aside for contingencies. EC models help companies
to identify and measure the risks they are facing, as well as, promote a culture of risk management within the organization.
While building a fully integrated EC model may require expensive modeling tools, General Insurance rms in India may think
of low cost excel/R based risk aggregation techniques as a rst step towards building EC models.
C4: Concurrent Sessions General Insurance Charles Cicci and Arijit Das, India
6 The Actuary India